Post on 16-May-2015
description
Lessons Learned from the NHS Payment by Results (PBR) Model
Joyce Drohan Director former Senior Advisor and Policy Director (Improvement and Efficiency) for Department of Health, England
PwC
What we do in healthcare is important
Doing it well is really important
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PricewaterhouseCoopers LLP
Content
• The challenge of transformational change in England
• Structure of the NHS and funding flows
• The challenges and issues of the current payment systems
• Elements of Effective Reimbursement
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PricewaterhouseCoopers LLP
Content
• The challenge of transformational change in England
• Structure of the NHS and funding flows
• The challenges and issues of the current payment systems
• Elements of Effective Reimbursement
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PwC
£20 billion of savings by 2014….and quality up
England - Assessing the cost challenge
Quality, Innovation, Productivity & Prevention (QIPP) = a sustainable NHS
care closer to home
earlier intervention
fewer acute beds
more standardisation by reducing variation
empowered patients and reduced unit costs
Reducing Variation in quality of Care and health, and in the use of health services, with many opportunities to improve quality by raising the many to the levels of the best and to look for ways to do things better
Reducing Management Costs the Department aims to reduce management costs within primary care trusts and strategic health authorities prior to their abolition. Acute, community and mental health trusts can also redesign their back office functions to streamline, consolidate and share functions
Maximizing Productivity Such as duplication of treatment or diagnostic processes, high levels of temporary staff usage, or not achieving potential day case rates or value in how it buys things in (procurement)
Earlier Intervention the NHS is better at responding to ill health when it becomes a serious problem rather than spotting problems earlier and dealing with them before they get serious
Improving Quality can also reduce costs, for example, reducing rates of infection and self-management of non-communicable disease
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Stages of Improvement and Change
Improvement with an institution
Integrated Improvement
Transformational Change
2013 Most organizations working to improve
internally
When does this happen…
what heavy lifting is needed to get there?
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Time
PricewaterhouseCoopers LLP
Content
• The challenge of transformational change in England
• Structure of the NHS and funding flows
• The challenges and issues of the current payment systems
• Elements of Effective Reimbursement
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PricewaterhouseCoopers LLP
How is the NHS run?
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PwC
How the money flows in health
Department of Health £107bn
NHS England
£91bn
£58bn
Clinical Commissioning
Groups
Mental Health
Acute Community
Health
Specialist Commissioning
(part of NHS England)
Primary Care
£24bn
£38bn £11bn
£9bn
Monitor will influence the allocation of c.10% of
all government expenditure through its
pricing role
£9bn
£9bn
Inclusion of primary care within the remit of the
payment system is under debate
Source: Monitor, United Kingdom. 2013
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Payment by Results
The Department of Health - The aim of Payment by Results (PbR) is to provide a transparent, rules-based system for paying trusts. It will reward efficiency, support patient choice and diversity and encourage activity for sustainable waiting time reductions. Payment will be linked to activity and adjusted for casemix. Importantly, this system will ensure a fair and consistent basis for hospital funding rather than being reliant principally on historic budgets and the negotiating skills of individual managers.
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2014-2015
NHS England and Monitor have taken on responsibility for the NHS payment system from the Department of Health under rules set out in the Health and Social Care Act 2012 (the 2012 Act).
2003-2004
PwC
The Health & Social Care Act 2012 sets out a new approach for pricing and a new role for Monitor
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Monitor will lead on:
Methodology for setting of prices
Setting prices Local modifications Rules for local price setting
NHS England will lead on:
Scope and design currencies Variation rules to National
Tariff
Close working and agreement
Joint Governance
Monitor Board
NHS England
Trade-offs are inevitable as prioritization will be where improvements can be made
Source: Monitor, United Kingdom. 2013
PwC
The first year for which Monitor will be responsible for pricing is 2014/15
There are three current types of contract for the current payment system
Monitor’s new role on pricing covers approximately 75% (about £67bn) of
the NHS budget – or 10% of all public expenditure
PbR is the primary mechanism of reimbursement for acute care providers,
while block contracts are the primary mechanism for community services
To date this money is allocated from commissioners to providers through three primary mechanisms: • PbR reimburses providers of care by the volume and type of care (case-mix)
provided based on a schedule of prices for specific interventions (identified by Healthcare Resource Groups (HRGs))
• Local tariffs are also paid by volume, but the price is determined locally by providers and commissioners (sometimes with a guide price)
• Simple block contracts pay providers to provide a given level of capacity
Source: Monitor, United Kingdom. 2013
PricewaterhouseCoopers LLP
Content
• The challenge of transformational change in England
• Structure of the NHS and funding flows
• The challenges and issues of the current payment systems
• Elements of Effective Reimbursement
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Challenges to the current PbR system
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Efficiency
Setting Changes
Care Coordination
Episodic Care
Innovation
Bundled Payment
PbR as it stands is not well designed to
promote or support larger scale shifts in
care from hospital to other settings due
to incentives facing hospitals to
maintain income and lack of flexibility to
vary tariffs to reflect different costs of
providing care in different settings
Setting Changes
priority to the prevention of illness, the
treatment of people with long-term
conditions, and the development of
integrated care for these people requires a
radical rethink of the incentives needed.
Attention should be given to the role of
bundled payments that cover care for people
with specific long-term conditions as well as
those with co-morbidities,
Bundled payment
Incentive to focus on value, prevention and efficiency Innovation
PbR
Efficiency incentive in PbR relationship to keep costs down is
unclear. Since there is limited interest in the profit/loss on individual
services to be more efficient within the individual hospital specialties
Efficiency
it does not provide payment relating to
the costs of co-ordination itself and it
does not provide a financial framework
that supports or directly incentivizes new
ways of delivering care for people with
long-term conditions.
Care Coordination
Specific admission may form just one
part of an extended treatment cycle for
some patients. If the episode is in part
determined by the effectiveness of
services in primary and community care,
hospital treatment may not be required.
So no incentive to reduce this admission
Episodic Care
J. Appleby et. al.,2012, The King’s Fund , United Kingdom – “Payment By Results: How Can Payment Systems Deliver Better Care”
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Risks to the developing system
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Content
• The challenge of transformational change in England
• Structure of the NHS and funding flows
• The challenges and issues of the current payment systems
• Elements of Effective Reimbursement
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PwC
Changes to the payment system aims to achieve a number of goals….
£ Distribute funds to providers
Facilitate choice and competition between providers; and ensure expenditure is and remains sustainable
For providers: better management information systems; increase efficiency of service delivery; manage costs appropriately; allocate resources appropriately; investment; and innovation
For commissioners: improve allocation of resources between providers; and drive up the quality
Source: Monitor, United Kingdom. 2013
PricewaterhouseCoopers LLP
Elements of an Effective Reimbursement System
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Information
• The incentives that are created by the reimbursement system.
• This is a consequence of how information is used and how
prices are set
Compliance
• The information that is collected and used to set levels of reimbursement
Information
Incentives
Compliance Incentives
• Compliance with the reimbursement system – in
particular whether providers and commissioners operate with in the rules of the reimbursement
system
• This matters as it is the link to ensuring that the intended
incentive effects of the reimbursement system feed
through to behaviours
• .
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Eight areas where we suggest that the reimbursement system could be improved
• Improving the information that is used to set reimbursement
• Ensuring the reimbursement models reflect the characteristics of the services they cover
• Adjusting for drivers of cost variation
• Encouraging quality improvements
• Improving transparency in price setting and stability of prices
• Simplifying the reimbursement system
• Working across settings of care boundaries
• Reviewing local arrangements
PwC Final Report For Monitor, United Kingdom, “Strategic Options For Costing”, 212
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PwC
Thank You
Pricing is a new role for Monitor
A lever to promote and protect quality health care for patients
Monitor will regulate prices that cover c £65 billion of NHS services in
National Tariff Document for use by 225 CCGs and 250 providers
Enhance nature of cost and quality data
Develop and implement range of tools according to segment
Key relationship with NHS CB
3 new functions within pricing